It turns out this number — a staggering debt of $534,000 per household — has caused quite the controversy. James Agresti, president of Just Facts, wrote to me about an editorial from Bloomberg taking USA Today to task for making a miscalculation. That came as a shocker to me. USA Today wasn’t the first to project a number that size. And my colleague Bill Beach and I used that very data point during a presentation last week in Raleigh, NC.

Trillions have now joined billions as amounts that are part of everyday conversation, but impossible to make meaningful. News that you thought your country owed $14.3 trillion but it actually owe $62 trillion has less impact than pulling a $20 out of your wallet and discovering that it’s only a $10. The notion that you yourself personally owe half a million dollars is simply unreal — it can’t be processed.

But as for the number itself, Agresti, whose nonprofit institute is dedicated to researching and publishing verifiable facts on public policy issues, isn’t buying Bloomberg’s argument. He rebuts three main points for American Thinker:

The first “obvious flaw” in such calculations, the Bloomberg editors tell us, is that “if a government retiree is entitled to a pension of, say, $35,000 a year, that is both a cost to the government and a benefit to that retiree. But only the cost is taken into account.”

Not true. The entire cost of the pension is not taken into account, only the gap between the employee’s pension contributions (money or service) and what the federal government has promised the employee in return. Big difference.

Assume for the sake of argument that Bloomberg offers its employees defined-benefit pensions (like the federal government), and imagine that Bloomberg told its editorial board that they would each have to cough up an extra $481,000 in pension contributions above and beyond their current commitments in order to receive the same pensions they were originally promised. Are we to believe that the editors would slough it off by saying, “It’s not a problem because the money will be used to pay for our benefits”?

Second, the Bloomberg editors claim that such calculations do not account for the fact that a dollar owed in the future is less of a burden than a dollar owed today.

Wrong again. Our calculations and those of USA Today and the Peter G. Peterson Foundation use net present values that account for the time value of money. To quote the U.S Treasury report from which we obtained most of the data used in our calculations, “The [social insurance] estimates are actuarial present values … Present values recognize that a dollar paid or collected in the future is worth less than a dollar today, because a dollar today could be invested and earn interest. To calculate a present value, future amounts are thus reduced using an assumed interest rate….”

It bears noting that the figures used by Just Facts are “closed group present values,” which are calculated in a manner that approximates how publicly traded companies are required to calculate their debts and obligations. In other words, we are using accounting principles that the federal government demands from publicly held corporations.

Third, the Bloomberg editorialists tell us that such calculations are plagued by “false precision” because they “require peering decades into the future.”

Forgive the obvious point, but private pension funds and insurance companies have been performing such calculations for many decades with generally acceptable results. Moreover, are we supposed to ignore the government’s liabilities and unfunded obligations because we cannot specify them with absolute precision? Imagine a corporate executive trying to make that argument to the SEC.

i still didn't see a breakdown on debt and actual debt. i am supposed to guess between 14.5 and 62 trillion. and as for pensions that money was taken in the 40's where the gov't was to invest it. so taking it away now is absurd. in 40's they payed good money for their pension and i rember when penny candy was a handfull. $50 a week you were wealthy. my father first made 5 cents an hour in 1948. so comparing them with us is stupid. real facts are needed as i have proven on ron pauls site and my website that i can save 15 trillion a year with 14 articles to go accept gov't spending i can't seem to find. if you know please help i know a few trillion i'll find wasted. i've got the best plan than anyone out there right now i guarantee it. tough love.

"Imagine a corporate executive trying to make that argument to the SEC."
The best line in the whole article. It's funny that our gov doesn't have to employ the same rules they demand from the private sector. Yet another "Do as I say, not as I do" moment.

While the exact actuarial number may be somewhat in doubt, the magnitude of this problem of un-funded future liabilities has been well known for a long time. The only people who do not know this are the ones who willfully avoid facing the issue.

Where did this problem originate from and when did that happen? Next set of questions should be the names of those who continued to be a part of this problem by allowing it to grow rather than be a part of the solution? I would take an educated guess that this situation began about the time the Federal Reserve was created, the "Progressive" income tax was passed and deficit spending started. The situation was then exacerbated by all the various "Progressive Policies" that caused more problems than they ever solved.

Part of the solution probably should include a single accounting system to be used by the government for all budgetary, fiscal and legislative actions so that with one standard set of terms with their associated definitions everyone can be on the same page. Repealing those "Progressive Policies" that were signed into law from the most recent to the creation of the Federal Reserve while strengthening Social Security and Medicare should help stop the growth of the debt. Developing a budget that spends less than it takes in would also be extremely beneficial as would such a thing called term limits. Ever notice the politicians are quick to limit the number of years one can serve in the military (which has a constitutional requirement, as in National Defense) yet they will not even consider service limits for themselves?

60% of this number came DIRECTLY from the bush tax cuts, that benefitted only a tiny portion of the wealthy. Yes, 5x the combined costs of the Iraq and Afganistan wars were brought about by the Bush tax cuts. Thats the fact. Under Bush and Reagan, the wealthy and corporations pay little or no tax in the hopes they will somehow "spend their money locally and fairly"…well as it turns out the wealthy dont give a $#@%# about people other than themselves, and spend their money on personal indulgences for the most part that benefit foreign economies. So now, all the American People owe $600,000 per family so the 5% of millionaires in the US could get a bit richer. The RICH LITERALLY STOLE from the american people's FUTURE. Its the height of an incredible scam. Want to know where money for your schools, hospitals, roads, and infrastructure is? Beverly hills, New York, Houston, Dallas, Florida…and internationally in the form of 10-15 homes per rich person, jewelery, yachts, high price prostitutes and mistresses, porn, breast enhancement surgeries, and copious amounts of drugs both legal and illegal. That is ACTUALLY what happened. Americans have given their birthright to the wealthy under the myth of "trickle down economics".

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